Getting into debt is such a common occurrence in Western nations that it could be considered an epidemic. It can tear couples apart, be a constant source of stress to an individual or even worse. If you are one of those people who don’t see a way out, please read this thoughtful piece by Jackie Beck.
We don’t want you wallowing or feeling bad about yourself for getting into debt. It happens. But to get over a problem we must admit that we have one and a good way to do that is look at the reasons why the problem exists and if you’re really lucky you might catch it before the problem becomes too overwhelming.
Keeping up with the Jones’
We are starting with quite possibly the worst reason to get into debt. Keeping up appearances to look rich when you are poor is a recipe for disaster.
Your lavish lifestyle will just become more and more addictive and you’ll inevitably accrue a mountain of debt.
The solution: Live more humble. Only buy what you can afford and stop trying to impress peers who only like you for your perceived wealth. Sort your finances out and you’ll attract real friends without having to shake with terror inside every time you pull out your credit card.
Accepting Insane Agreements
None of us pretend to be perfect here at Redefining Progress. When I was 21 I got a Nissan Almera and agreed to pay a whopping 49% APR on the repayments! That’s basically double what the old banger was worth.
The UK were giving out 110% mortgages like candy to British residents in the early 2000s, resulting in an inevitable recession. These kind of offers are everywhere; be aware.
The solution: Always do your research on APR, repayment plans and never make a last-minute, emotional decision when it comes to debt.
It was no fun for Tammy Wynette and it’s rarely a picnic for anyone else. Divorces are incredibly emotionally difficult for all parties involved and one thing that makes it harder is paying for court fees to battle disputes, or for one side of the former partnership to get the rough side of the deal.
The solution: Don’t worry, we aren’t going to tell you to not get married. But try to make sure you and your partner are on the same page before you get hitched.
Suddenly Reduced Income
We’ve seen it in many movies, the boss tells the employee “I’m sorry, we just can’t afford to keep you on anymore,” inducing instant misery and stress on the unsuspecting person who just got fired.
But for some of us it happens in real life. It can happen to anyone, but when it does it can be very cortisol-inducing.
The Solution: Start considering a backup plan. Check out this article for ideas on leveraging your money, we are a big believer in diversifying.
Sometimes we get desperate. We work hard to try and stay above water. Some of us even have mouths to feed other than our own and we just can’t see and end – so we desperately borrow from a company without considering the long-term debt we get into.
The solution: Take a time out whenever you’re feeling like gambling on debt.
Occasionally we are bullish in our gambling and we allow our heart to rule our minds. “Fortune favours the brave” is our motto and we get tunnel vision in the moment, only for the circumstances to hit us like a Mike Tyson uppercut when those dreaded letters come flying in.
The solution: Always educate yourself on the risk that you’re taking, Follow trends. Read. Read more. Become obsessive about it, this is your money after all and you want to make sure it makes you more money.
Poor Money Management
We are sure that in the future, we will look back on history and find it absolutely criminal that ‘money management 101’ was not part of our studies in secondary school.
Often people don’t have a positive role model when it comes to making and saving money and the vicious cycle continues.
The solution: Write down every dollar/pound that you spend. It’s boring, yes. But you will be shocked at how much you are overspending. Track it and look back at it at the end of every month and aim to cut out unnecessary spends next month,
We are currently living in a global pandemic so there are many people who feel royally screwed last-minute, like the rug was pulled from beneath them.
You’re certainly not alone in this.
The solution: This too shall pass. Ride the wave but keep on the look out for better options. Always keep the faith.
Lack of Personal Accountability
It might sound harsh but we are a big believer in personal accountability here. Victimhood is often used as currency nowadays. We feel for you if you had a bad start to life, many of us on the team here at RP did too, but you have to make the most of what you have already and build upon it.
No one else is going to save you but you.
The solution: Make personal accountability your priority. It’s scary at first, but it’s also incredibly empowering.
We hope you got some value from our reasons why people get into debt article. Like, share and subscribe and expect us to cover more debt solutions on a regular basis.